Legislature gives Oregon University System freedom from agency status

Bill Graves/The OregonianPortland State University campus in the park blocks of Southwest Portland

The Oregon University System's quest for more independence and freedom from state regulations cleared its final major hurdle Monday with approval by the House.

Senate Bill 242 would end the state agency status of Oregon's seven public universities, giving them more freedom in how they manage, spend and raise money.

"It is a sea change in higher education," said Paul Kelly, president of the State Board of Higher Education. "It is almost a new beginning."

The bill passed 55-5 in the House, but because of small changes made in the budget committee, the Senate must vote on it again. The Senate is expected to pass it as early as Tuesday and send it on to Gov. John Kitzhaber, who says he will sign it.

Rep. Michael Dembrow, D-Portland, called the bill the "capstone of our higher education reform work" in this session.

"We are freeing our universities to do what great universities do, to be what great universities are," he said. "We are creating a better path for young Oregonians."

But Rep. Mitch Greenlick, D-Portland, said the universities want freedom but have not produced a plan showing where they want to go.

The university system, he said, is "like an adolescent: 'Please give us some money and don't tell me when to come in tonight.'"

Rep. Tobias Read, D-Beaverton, said the bill would free universities from stifling bureaucratic regulations that cost them money, slow building projects and increase their financial uncertainty.

"Universities will no longer get treated the same as the DMV or the Department of Corrections," he said. "They will no longer need the Department of Administrative Services' permission to fix a roof on a residence hall."

The bill would add three more slots to the 12-member State Board of Higher Education and create a Higher Education Coordinating Commission to connect policies of universities and community colleges and give the entire higher education system more coherence.

The measure also would allow universities to keep the interest they collect on tuition, which the Legislature has raided for other uses in the past. University leaders estimate they could save $2 million a year by leaving the state-worker health insurance pool and forming their own. They also would have more freedom to make contracts, set salaries, make purchases and hire legal services.

"We're no longer going to wait around for the state to solve our problems," he said. The bill acknowledges that "higher education in Oregon needs to be thought about differently than it has in the past when it was seen as something that the state does. Now we see it as something that students and families and institutions do with some help from the state."

Kelly said the board could now begin exploring new financial models for the university system. That would include, he said, looking at the proposal by University of Oregon President Richard Lariviere to match private donations with state bond money to create a $1.6 billion endowment for operating the university.

In exchange for the autonomy it gains under the bill, the university system would be held accountable to performance goals such as targets for enrollment, graduation rates, degrees awarded, research grants and affordability.

The bill drew wide support from education leaders and business groups.

Read used a football analogy to say the bill would pave the way to a brighter future for Oregon universities.

"This is not a flashy wide receiver," he said. "This is the offensive lineman who clears the path for the wide receiver...This is no small thing we do today."